To maximize their effectiveness, color cases should be printed in color.On April 23, 1985, the Coca-Cola Co. announced a decision that would rock the world. The old Coke formula would be taken off the market and replaced with a smoother, sweeter taste. The reaction of the American people was immediate and violent, causing three months of unrelenting protest against the loss of Coke. Was the marketing research at fault? The launch strategy? Or did Coke "just not get it"? This case explores marketing's most famous public disaster to reveal deep lessons about managing the brand. Includes color exhibits.
Swot Analysis of "Introducing New Coke" written by Susan Fournier includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Coke Sweeter facing as an external strategic factors. Some of the topics covered in Introducing New Coke case study are - Strategic Management Strategies, Crisis management, Customers, Product development and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Introducing New Coke casestudy better are - – talent flight as more people leaving formal jobs, there is backlash against globalization, geopolitical disruptions, wage bills are increasing, increasing energy prices, increasing household debt because of falling income levels, increasing commodity prices,
competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Introducing New Coke
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Introducing New Coke case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Coke Sweeter, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Coke Sweeter operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Introducing New Coke can be done for the following purposes –
1. Strategic planning using facts provided in Introducing New Coke case study
2. Improving business portfolio management of Coke Sweeter
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Coke Sweeter
Strengths Introducing New Coke | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Coke Sweeter in Introducing New Coke Harvard Business Review case study are -
High switching costs
– The high switching costs that Coke Sweeter has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Cross disciplinary teams
– Horizontal connected teams at the Coke Sweeter are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Successful track record of launching new products
– Coke Sweeter has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Coke Sweeter has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Strong track record of project management
– Coke Sweeter is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Coke Sweeter has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Introducing New Coke Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Learning organization
- Coke Sweeter is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Coke Sweeter is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Introducing New Coke Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Coke Sweeter is present in almost all the verticals within the industry. This has provided firm in Introducing New Coke case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Coke Sweeter digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Coke Sweeter has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Low bargaining power of suppliers
– Suppliers of Coke Sweeter in the sector have low bargaining power. Introducing New Coke has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Coke Sweeter to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Coke Sweeter has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Coke Sweeter to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Coke Sweeter has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Introducing New Coke - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Coke Sweeter has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Introducing New Coke HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Introducing New Coke | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Introducing New Coke are -
Low market penetration in new markets
– Outside its home market of Coke Sweeter, firm in the HBR case study Introducing New Coke needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– It come across in the case study Introducing New Coke that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Introducing New Coke can leverage the sales team experience to cultivate customer relationships as Coke Sweeter is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Susan Fournier suggests that, Coke Sweeter is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Coke Sweeter supply chain. Even after few cautionary changes mentioned in the HBR case study - Introducing New Coke, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Coke Sweeter vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Introducing New Coke, in the dynamic environment Coke Sweeter has struggled to respond to the nimble upstart competition. Coke Sweeter has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Coke Sweeter has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to strategic competitive environment developments
– As Introducing New Coke HBR case study mentions - Coke Sweeter takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Introducing New Coke, is just above the industry average. Coke Sweeter needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
No frontier risks strategy
– After analyzing the HBR case study Introducing New Coke, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Increasing silos among functional specialists
– The organizational structure of Coke Sweeter is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Coke Sweeter needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Coke Sweeter to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Coke Sweeter has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Introducing New Coke | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Introducing New Coke are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Coke Sweeter is facing challenges because of the dominance of functional experts in the organization. Introducing New Coke case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Manufacturing automation
– Coke Sweeter can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Coke Sweeter can use these opportunities to build new business models that can help the communities that Coke Sweeter operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Coke Sweeter can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Leveraging digital technologies
– Coke Sweeter can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Coke Sweeter can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Introducing New Coke, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Coke Sweeter to increase its market reach. Coke Sweeter will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Loyalty marketing
– Coke Sweeter has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Using analytics as competitive advantage
– Coke Sweeter has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Introducing New Coke - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Coke Sweeter to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Coke Sweeter to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Coke Sweeter to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Coke Sweeter can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Introducing New Coke suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Building a culture of innovation
– managers at Coke Sweeter can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Creating value in data economy
– The success of analytics program of Coke Sweeter has opened avenues for new revenue streams for the organization in the industry. This can help Coke Sweeter to build a more holistic ecosystem as suggested in the Introducing New Coke case study. Coke Sweeter can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Introducing New Coke External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Introducing New Coke are -
High dependence on third party suppliers
– Coke Sweeter high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Coke Sweeter needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Coke Sweeter with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Coke Sweeter can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Introducing New Coke .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Introducing New Coke, Coke Sweeter may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Shortening product life cycle
– it is one of the major threat that Coke Sweeter is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Coke Sweeter can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Coke Sweeter in the Sales & Marketing sector and impact the bottomline of the organization.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Coke Sweeter.
Regulatory challenges
– Coke Sweeter needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Increasing wage structure of Coke Sweeter
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Coke Sweeter.
Consumer confidence and its impact on Coke Sweeter demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Environmental challenges
– Coke Sweeter needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Coke Sweeter can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Weighted SWOT Analysis of Introducing New Coke Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Introducing New Coke needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Introducing New Coke is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Introducing New Coke is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Introducing New Coke is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Coke Sweeter needs to make to build a sustainable competitive advantage.
